Western Energy Co. v. Burlington No ( 1981 )

IN THE SUPREME COURT OF THE STATE OF MONTANA
1981
WESTERN ENERGY COMPANY,
Plaintiff and Respondent,
BURLINGTON NORTHERN INC.,
Plaintiff-Intervenor and Respondent,
GENIE LAND COMPANY,
Defendant and Appellant.
Appeal from: District Court of the Sixteenth Judicial District,
In and for the County of Rosebud
Honorable Arthur B. Martin, Judge presiding.
Counsel of Record:
For Appellant:
Patten and Renz, Billings, Montana
James A. Patten argued, Billings, Montana
For Respondent :
Moulton, Bellingham, Longo & Mather, Billings, Montana
William Bellingham argued, Billings, Montana
R. Blair Strong, Butte, Montana
For Intervenor:
Gary H. Peterson, Billings, Montana
Submitted: September 18, 1981
Decided: November 5, 1981
Filed:
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Mr. Justice John C. Sheehy delivered the Opinion of the
Court.
Genie Land Company appeals from a judgment in the
District Court, Sixteenth District, Rosebud County, in favor
of Western Energy Company and Burlington Northern, Inc.,
declaring the rights of the parties under mineral reservations
contained in warranty deeds, and permanently enjoining Genie
Land from interfering with Western Energy's activities in
procuring a resource inventory of the lands involved. Genie
Land also appeals from the denial of a trial by jury by the
District Court.
Genie Land is the present owner of, and successor in
interest to the surface of lands purchased in 1945 and 1947
from Northern Pacific Railway, predecessor in interest to
Burlington Northern. The deeds are subject to the following
mineral reservation:
"excepting and reserving unto the grantor, its
successors and assigns, forever, all minerals
of any nature whatsoever, including coal, iron,
natural gas and oil, upon or in said land, together
with the use of such of the surface as may be
necessary for exploring for and mining or otherwise
extracting and carrying away the same; but the grantor,
its successors and assigns, shall pay to the grantee
or to its successors or assigns, the market value at
the time mining operations are commenced of such
portion of the surface as may be used for such
operations or injured thereby, including any improve-
ments thereon . . ."
Western Energy acquired the right to mine the coal
underlying Genie's surface from the Montana Power Company,
which had leased the coal from the Northern Pacific Railway
The District Court action was brought by Western Energy
to enjoin Genie Land from preventing Western Energy's resource
inventory operations upon the lands involved and to obtain
a declaratory judgment adjudicating the respective rights
and duties of Western Energy and Genie Land under the coal
lease and mineral reservations involved. Burlington Northern
joined in the District Court action as a plaintiff intervenor.
The District Court judgment granted Western Energy's
request for injunctive relief, allowed Western Energy access
upon the lands in order to conduct the proposed resource
inventory operations and ruled that the mineral reservations
gave the mineral owner and its lessee the right and authority
to conduct the resource inventory operations.
The principal issue involved is whether the mineral
reservation set forth above gives Western Energy the right
to conduct its resource inventory operations on Genie's
surface. These operations are data-gathering in nature and
provide a would-be surface mine operator with the data
required to be included in its surface mine permit application.
The resource inventory operations contemplated by Western
Energy include: (1) soil surveys, (2) vegetation surveys,
(3) wildlife surveys, (4) hydrological surveys, (5) archeological
surveys, (6) topographical mapping surveys, (7) air quality
monitoring, and (8) coal and overburden analysis.
Genie contends that the resource inventory operations
will entail tests of origins of the surface, a one year
study of the wildlife on the surface, a survey of the wells,
springs and surface water, a review of the surface for any
archeological sites, placing and physically occupying survey
monuments thereon, establishing an air quality monitoring
station which must be attended every three days by Western
Energy personnel, drilling several wells, and various multiple
entries onto Genie's surface by Western Energy agents and
personnel. Western Energy admits the possibility of one
year's presence on Genie's surface; Genie contends the
presence on its surface could be up to two years.
-3-
Genie concedes that under the mineral reservation,
Western Energy could enter Genie's surface to drill test
and core holes to determine coal and ore deposits, and the
extent thereof.
Western Energy concedes that the compilation of the
inventory
data to be gathered by its proposed resource/operations is
necessary for inclusion in Western Energy's application for
a permit to mine the coal under Genie's surface. Our statutes
and the administrative regulations thereunder, requiring much
of the data for inclusion in a strip mining permit application,
were first adopted in 1973. Section 82-4-222, MCA. In
1975, an additional statutory requirement was adopted that
when the surface owner is not the owner of the mineral
estate proposed to be mined by strip mining operations, the
application for a strip mining permit must include the
written consent or waiver by the owners of the surface lands
involved to enter and commence strip mining operations on
the land, except that this condition does not apply when
the mineral estate is owned by the federal government in fee
or in trust for an Indian tribe. Section 82-4-224, MCA.
The principal point urged by Genie in this appeal is
that the mineral reservation above does not give Western
Energy the authority to conduct its resource inventory
operations on the surface owned by Genie.
In support of that point, Genie contends that resource
inventory operations are not included in the plain language
of the mineral reservation; that the proposed resource
inventory operation would be burdensome upon the surface
estate; that the right to "the use of such of the surface as
may be necessary for exploring for" minerals is limited to
mean what is necessary to discover ore and its extent; that
resource inventory operations constitute neither "mining"
nor "extracting" minerals; that resource inventory operations
are excluded by the maxim, "the express mention of one thing
implies the exclusion of another;" and that the need for
resource inventory operations, established by the Montana
statutes after the execution of the warranty deeds here in
question, does not excuse a legal wrong to be suffered by
Genie.
It is further contended by Genie that the proposed
resource inventory operations are not reasonable because
Western Energy has not obtained, and will never obtain, the
consent of Genie to conduct strip mining operations, which
it contends is the key to all mining and premining purposes;
that exploration is futile because of the lack of consent;
that here there can be no easement by implication or necessity
as a reasonable interpretation of the mineral reservations;
that public policy protects the surface owner as evidenced
by the adoption of section 82-4-224, MCA, supra; that Western
Energy does not intend to conduct mining operations on
Genie's surface at this time; and that resource inventory
operations were not within the intention of the parties at
the time of the conveyances containing the mineral reservations.
Finally, Genie contends that it is entitled to a jury
trial to resolve fact issues arising out of the mineral
reservations.
Western Energy and Burlington Northern respond that
consent of the surface owner is not an issue at this stage
of the proceedings since a formal application for a strip
mining permit has not been made to State authorities; that
the proposed resource inventory operations constitute a
reasonable burden upon the surface owners of coal lands; that
strip mining was conducted at the time of the deeds of
conveyance here in question; that resource inventory operations
are a reasonable use of the surface under the mineral
reservations; that resource inventory operations are necessarily
implied in the mineral reservations contained in the deeds
of conveyance; and that the maxim "the express mention of one
thing implies the exclusion of another" does not apply here.
Western Energy and Burlington Northern further contend that
no jury trial is required of the issues relating to the
right of entry for the purpose of resource inventory operations.
Our resolution of this controversy is based upon our
conclusion that the proposed resource inventory operations
are necessarily implied in the language reserving the minerals,
including coal, "together with the use of such of the surface
as may be necessary for exploring for and mining or otherwise
extracting and carrying away the same . . ." We also conclude
that strip mining was within the contemplation of the parties
at the time of the deeds of conveyance containing the mineral
reservations because at that time Northern Pacific Railway
Company was conducting coal strip mining operations within
relatively short distances from the lands there conveyed.
--
See, 54 Arn.Jur.2d 389, 390, Mines and Minerals, S 210.
Three cases applying Montana law have established that a
reasonable use of the surface by the owner of a severed
mineral estate for the enjoyment of the mineral reservation
may be implied from the terms of the mineral reservation,
though not expressly stated therein. In Hurley v. Northern
Pacific Railway Company (1969), 153 Mont. 199, 455 P.2d 321,
(reversed on other grounds) this Court affirmed that a
mineral owner had the right to reasonable use of the surface
area under mineral reservations similar to the one here
involved. We quoted from California authority to the effect:
"So far as duties are concerned in the instant
case, it is I ... well-settled that the owner of
the oil and mineral estate has a right to enter
upon the surface of the property and make such
use thereof as is reasonably required for the
enjoyment of his estate therein . .
. ' (citing
Wall v. Shell Oil Company (1962), 209 Cal. App. 2d
504, 25 Cal. Rptr. 908, 911.)
"'If a particular facility is necessary and con-
venient to the operations of the oil and mineral
owner, it may be placed anywhere upon the surface
area in which he has the right of user, so long
as such placement is reasonable under prevailing
conditions and even though such placement in
particular instances may work a hardship on
the surface owner.'" 153 Mont. at 202, 455 P.2d
at 323, citing Wall, supra, at 915.
--
In Russell v. Texas Company (9th Cir. 1956), 238 F.2d
636, 644, the court of appeals affirmed a Montana federal
district court judgment that a mineral reservation similar
to the one at bar entitled the owner of the mineral rights
to take from the land and use that amount of water reasonably
necessary for the exploitation of the mineral rights as an
incident to the mineral ownership.
In Northern Cheyenne Tribe v. Hollowbreast (D. Mont.
1972), 349 F. Supp. 1302, 1310, rev'd on other grounds sub nom.
Northern Cheyenne Tribe v. Northern Cheyenne, etc., 505 F.2d
rev'd on other grounds
268 (9th Cir. 1974),/425 U.S. 649, 96 S. Ct. 1793, 48 L. Ed. 2d
274 (1976), the District Court recognized the right of the
owner of the mineral estate or its lessee to enter and use
the surface for exploration, recovery and development of the
minerals as may be reasonably necessary.
We find no Montana cases, nor have we been cited to
any, that contravene these statements relating to the implied
rights of the owner of a severed mineral estate to the
reasonable enjoyment of his ownership. This authority
overcomes Genie's contention that the plain language of the
reservation must include the right to resource inventory
operations,or else such rights are limited to the means
necessary to discover ore and its extent. It is obvious
from the cases that a mineral reservation carries with it
implied rights of use of the surface which are not necessarily
"exploring," "mining," or "extracting," but may be indirectly
related to those activities.
We turn therefore to Genie's contention that, in any
event, the resource inventory operations are not a reasonable
use of the surface under the implied rights contained in the
mineral reservation.
First, we do not find that the lack of Genie's consent
now, and the probable lack of its consent in the future, to
any application for a strip mining permit by Western Energy
is an issue at this time. Under the language of the mineral
reservations, Genie's consent is not necessary to the right
of Burlington Northern, as the owner, and Western Energy as
its lessee, to explore for coal. Indeed, Genie admits that
Western Energy has the right to enter upon Genie's lands for
the purpose of drilling test or core holes to determine the
extent of the coal deposits. The question becomes whether
it is a reasonable implied right for Western Energy additionally
to undertake the compilation of the data required under
regulations for a strip mining permit.
Admittedly, there has been a broad expansion of regulatory
demands in connection with the strip mining of coal in
Montana. The adoption of laws by the legislature to protect
the environment, and the interests of surface owners in would-
be or actual strip mining operations, have complicated the
judicial task of determining mutual rights under mineral
reservations such as these. Nor has Montana been alone in
expanding its law and regulations to meet these concerns.
Federal regulations with respect to federal applications for
surface mining permits on federal lands require comparable
information to the Montana regulations. 30 C.F.R. § 779.
Additionally, the federal regulations with respect to severed
mineral estates require that the application for a surface
mining permit on federal lands include a copy of the surface
owner's consent, or a copy of the document of conveyance
that expressly granted or reserved the right to extract the
coal by surface mining methods; or if not expressly granted,
documentation that under the applicable state law, the
applicant has legal authority to extract by surface mining.
30 C.F.R. § 778.15.
Although strip mining was known at the time of the
deeds of conveyance here in question, and indeed was taking
place within a short distance of the lands conveyed, it must
be conceded on all sides that the development of environmental
protection laws and regulations relating to strip mining
have occurred only in the last decade. Does this mean that
under mineral reservations made in 1945 and 1947, the rights
of the mineral owners are restricted, as to exploration and
mining, to such implied rights as were in existence at the
time of the deeds of conveyance? We think not. We agree
with the holding in Oakwood Smokeless Coal Corporation v.
Meadows (Va. 1945), 34 S.E.2d 392, 395, that the owner of a
severed mineral interest is not limited to such appliances
and applications as were in existence when the mineral grant
or reservation was made, but that pace may be kept with the
progress of society and modern invention. It was certainly
the understanding of the parties at the time of the deeds
of conveyance that Northern Pacific Railway Company withheld
the mineral ownership, and reserved the right to do what
was necessary to extract the minerals. For us to hold
otherwise with respect to such implied rights, in the light
of newer regulatory adoptions would be to put the mineral
estate beyond the reach of its owner. In justice, that
cannot be.
Nor do we find the extent of the burden upon the servient
estate unreasonable, particularly in view of the language in
the mineral reservation which assures the surface owners the
market value, at the commencement of the operations of the
premises, used for such purposes or injured thereby. It is
clear that the adoption of the regulations by the state for
the protection of the environment is a reasonable exercise
of its police power. The necessity for mine operators to
meet those requirements in exploring for or extracting
minerals is accordingly a reasonable use of the surface for
the purpose of mining operations.
As to Genie's claim that it was entitled to a jury
trial in this cause, there are no disputed issues of fact
that require a jury trial. The issuance of the injunction is
in any event, an equitable action. Federal Land Bank of
Spokane v. Myhre (1940), 110 Mont. 416, 422, 101 P.2d 1017,
1020. Genie is not entitled to a jury trial of any issues
in this cause.
We emphasize that we limit this decision to the issues
directly involved in this case, that is, the right of the
mineral owner to conduct resource inventory operations as a
part of the right to explore for minerals under the reservation,
looking toward eventual compliance with regulations relating
to a mining permit.
The judgment of the District Court is affirmed. This
cause is remanded to the District Court for further proceedings
with respect to damages and such other issues as are not
disposed of here. We do not foreclose a jury trial with
respect to such damages.
We concu
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Justices
Mr. J u s t i c e Frank B. Morrison, J r . , d i s s e n t i n g :
I r e s p e c t f u l l y d i s s e n t from t h e m a j o r i t y o p i n i o n .
I n my o p i n i o n t h i s c a s e does n o t i n v o l v e i n t e r p r e t a t i o n
of t h e deed's mineral reservation. N reasonable construction
o
c o u l d r e a c h a r e s u l t whereby " r e s o u r c e i n v e n t o r i e s " a r e
included w i t h i n t h e language "exploring f o r " minerals. The
r i g h t t o e n t e r t o compile r e s o u r c e i n v e n t o r i e s must e x i s t
i n d e p e n d e n t of t h e r i g h t t o e n t e r f o r e x p l o r a t i o n and must
depend upon and b e i n c i d e n t a l t o a r i g h t t o mine. The
m a j o r i t y c o r r e c t l y c o u l d imply r e s e r v a t i o n i f t h e r e was a
r i g h t t o strip-mine.
The law i s c l e a r . The m a j o r i t y c o r r e c t l y n o t e s : " I n
197 5, a n a d d i t i o n a l s t a t u t o r y r e q u i r e m e n t was a d o p t e d t h a t
when t h e s u r f a c e owner i s n o t t h e owner of t h e m i n e r a l
e s t a t e proposed t o be mined by s t r i p - m i n i n g o p e r a t i o n s , t h e
a p p l i c a t i o n f o r a s t r i p - m i n i n g p e r m i t must i n c l u d e t h e
w r i t t e n c o n s e n t o r waiver by t h e owners of t h e s u r f a c e l a n d s
i n v o l v e d t o e n t e r and commence s t r i p - m i n i n g o p e r a t i o n s on
t h e land, * * *" Genie Land h a s r e f u s e d t o g i v e p e r m i s s i o n
t o Western Energy Company t o s t r i p - m i n e . Western Energy
d o e s n o t have t h e r i g h t t o e n t e r f o r p u r p o s e s of s t r i p -
mining and, t h e r e f o r e , h a s no i n c i d e n t a l r i g h t t o e n t e r f o r
p u r p o s e s of c o m p i l i n g r e s o u r c e i n v e n t o r i e s .
The e f f e c t of t h e m a j o r i t y d e c i s i o n i s t o s a y , " a l t h o u g h
you have no deeded r i g h t t o e n t e r f o r t h e p u r p o s e of c o n d u c t i n g
r e s o u r c e i n v e n t o r i e s and a l t h o u g h under t h e law you have no
r i g h t t o strip-mine without the owner's consent, w e w i l l
imply a r i g h t t o e n t e r f o r r e s o u r c e i n v e n t o r y b e c a u s e r e s o u r c e
i n v e n t o r i e s w e r e unknown a t t h e t i m e t h e deed was e x e c u t e d ,
and s i n c e such i n v e n t o r i e s were unknown, i t must have been
w i t h i n t h e c o n t e m p l a t i o n of t h e p a r t i e s t h a t , had t h e y been
known, t h e y would have been i n c l u d e d . " I cannot understand
t h i s reasoning process. I can s e e no b a s i s w h a t e v e r , e i t h e r
i n t h e deed o r i n law, f o r t h e r e s u l t which t h e m a j o r i t y
reaches.
I would r e v e r s e and remand w i t h d i r e c t i o n s t o p r o c e e d
i n conformity with t h i s d i s s e n t .